A DIFFUSION-MODEL OF INDUSTRIAL SECTOR GROWTH IN DEVELOPING-COUNTRIES

Logistic growth functions of the share of manufacturing value added in Gross Domestic Product over time are used to provide estimates of the rate at which the industrial sector diffuses into a developing economy. Key factors responsible for determining intercountry differences in the rate of industrial diffusion include export performance, expenditures for human capital development, the cost of external borrowing, and the rate of population growth. Results emphasize the importance of government policies in support of both human capital development and export promotion. Considerable support is provided for application of the Otani-Villanueva growth model to issues closely related to long-run growth of per capita real output, such as the diffusion of industrial activity.